DIGITAL TRANSFORMATION IN CONSUMER PRODUCTS

AlixPartners' 2019 study for achieving profitable growth

August 15, 2019

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ACHIEVING PROFITABLE GROWTH IN CONSUMER PRODUCTS

Digital technologies are disrupting the marketplace for consumer products (CP) companies. Industry leaders are actively addressing core drivers of success - including the relationships between manufacturers and retailers, digital spending, and company culture. Our 2019 study - based on an annual executive survey of the industry - outlines strategies to leverage the rapid rate of change.

Two key factors impact the success of a digital transformation: Corporate culture and the amount of digital spending that is below ROI expectations.

"For a digital transformation to be successful, company leadership, starting with the CEO, must shatter traditional cultural, organizational, and structural silos that are frequently the most intractable impediments to change."

Digital disruption is causing companies to invest billions in digital transformation across their full operating model—including the digital path to purchase—working to make digital part of their DNA. However, results from our survey show that much of that investment is wasted. Digital transformation must be targeted, measured, and tailored to be profitable.

At the same time, digital and physical commerce are converging, and those further along the digital journey see this largely as already having happened.

AlixPartners surveyed 1,110 executives across China, France, Germany, India, the UK, and the US, who are or have been decision makers for digital transformation in CP companies, to better understand how their businesses can successfully drive profitable growth in today’s challenging environment.

Our experts have identified two key categories that behave as barriers to transformation:

Waste: Much of traditional marketing and trade spend is wasted, but based on our survey, digital marketing and trade spend aren’t much better. More than half of digital advertising and trade spend is either wasted or not even measured.

Culture: Digital transformation is an enabler of business transformation, but it has been a frustrating process for many—particularly those farthest along in the journey. For these groups, affecting overall cultural change is recognized as one of the leading barriers to successful transformation.

Almost $50 billion annually in digital advertising and trade spend - 60% of the total - is failing to drive positive ROI. Where is your company on this journey - and what can you do to improve? - Read the press release